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Lloyds has been heavily criticised for sending what MPs called “sham” debt recovery letters to consumers and small companies.

Andrew Tyrie, chairman of the Treasury select committee, said: “Lloyds failed to convince us . . . that the letters were not calculated to mislead . . . or to provide any satisfactory explanation as to why it issued letters in this form.”

Mark Garnier, a Conservative MP, said the letters were “purely constructed in order to threaten”.

The criticism follows last month’s censure of Wonga, the payday lender, by the Financial Conduct Authority for sending fake legal letters to customers. It has since emerged that several